Behavioral finance is a branch of finance that combines psychological insights into human behavior with traditional economic theory to explain how and why financial markets behave the way they do. It seeks to understand the irrational and often unpredictable decisions made
by investors and market participants, which cannot be fully explained by traditional finance theories like the efficient market hypothesis (EMH).
The scope of behavioral finance encompasses various aspects of financial decision-making, including: Investor Behavior: This includes studying how individual investors and market participants make decisions about buying, selling, and holding financial assets. It examines factors such as
risk tolerance, cognitive biases, emotions, and heuristics that influence investor decision-making.